Want to understand what\u2019s really going on in Britain, and how we can fix it?<\/p>\n
Join Vicky Spratt\u2019s subscriber-only newsletter,\u00a0The State We\u2019re In,\u00a0where she breaks down the big issues shaping the country. You can sign up to get it sent straight to your inbox, every single week,\u00a0here<\/a>.<\/a><\/p>\n Happy new tax year to all who celebrate. As a result of several major policy decisions made by Rachel Reeves<\/a> in November, certain groups of people have received very valuable Easter eggs this year. A host of benefits<\/a> (which include the state pension) are rising as part of a welfare package worth a total of more than \u00a3330bn.<\/p>\n Many of those benefits are necessary, and a number of them are actually afforded to people who are in work, but, equally, Britain is now butting up against a serious problem.<\/p>\n In the last financial year, the Government raised \u00a3331bn in income tax but spent \u00a3330bn on welfare. I know it is, or at least should be, an obvious statement that we ideally don\u2019t want our income tax revenues to equal welfare spending, but given we seem unable to have a balanced conversation about welfare<\/a>, it\u2019s worth repeating.<\/p>\n New FeatureIn ShortQuick Stories. Same trusted journalism.<\/p>\n It\u2019s also worth pointing out that millions of workers on little more than average salaries who have a household income of between \u00a380,000 and \u00a3100,000 are narrowly missing out on benefits and being hammered by the higher living costs that have been left by inflation<\/a>.<\/p>\n Coming up in this week\u2019s newsletter:<\/p>\n Which benefits have gone up?<\/p>\n Which types of people are not eligible for state support and are struggling?<\/p>\n What, if anything, can we do about our spiralling benefits bill?<\/p>\n First up, in a huge victory for the Labour Party\u2019s soft left, the two-child benefit limit is no more. This means that around 480,000 families with three or more children will now see their benefits rise by an average of \u00a34,100 a year. The Conservatives opposed this move, and critics argued that the \u00a32.5bn it will cost could be better spent elsewhere. But as former prime minister Gordon Brown told me exclusively<\/a> shortly after Labour entered Government, lifting 300,000 children out of poverty in this way will benefit society in years to come and improve their life chances.<\/p>\n Other changes to the basic allowance available via universal credit mean that around three million families will get an extra \u00a3120 this year. However, new claimants may find that the health element of their benefits has been halved. Disability benefits<\/a>, including personal independence payments (PIP), which caused controversy when former welfare secretary Liz Kendall proposed to cut them, and carer\u2019s allowance, will also rise by 3.8 per cent in line with consumer prices.<\/p>\n Retirees in receipt of the state pension<\/a> are also getting a pay rise to the tune of 4.8 per cent because of the triple lock on pensions. This means that the new flat-rate state pension \u2013 for those who reached state pension age after April 2016 \u2013 is increasing to \u00a3241.30 a week, or \u00a312,547.60 a year, a rise of \u00a3574.60. The old basic state pension \u2013 for those who reached state pension age before April 2016 \u2013 is going up to \u00a3184.90 a week, or \u00a39,614.80 a year, a rise of \u00a3439.40.<\/p>\n Note, however, that housing benefit is frozen and has not gone up this spring. Perhaps I\u2019ll write about why that\u2019s an issue next week.<\/p>\n Anyway, to the extent that these benefit increases will protect vulnerable groups, these rises are good. But, increasingly, and now particularly as an economic crisis looms because of the fallout of the US-Israeli war with Iran<\/a>, working people who are not eligible for welfare support face being hammered \u2013 sorry, technical term \u2013 once again.<\/p>\n Spare a thought for young adults and families where one person earns an income of \u00a360,000 or more. Once one individual partner\u2019s net income hits \u00a360k, their child benefit starts to be tapered off, reducing until the higher earner\u2019s income reaches \u00a380,000 or more.<\/p>\n While these families would contain at least one adult earning above the national average wage of \u00a339,000, they are hardly what you\u2019d call rich. They are barely even in the Henry (High Earner Not Rich Yet) category and, unless they\u2019ve got some wealthy parents hiding in the background, are likely to have very high overheads owing to seriously chunky housing costs for both mortgage holders and renters.<\/p>\n The cost of living<\/a> also remains high, with inflation at 3 per cent compared to the Bank of England\u2019s target of 2 per cent. It is also highly likely to go up because of the Middle East conflict. At the same time, average annual pay growth is at a five-year low. After taking inflation into account, wages grew by 0.5 per cent between November and January 2026, according to the Office for National Statistics.<\/p>\n It\u2019s hard out there for the average British household. In recent weeks, I\u2019ve interviewed dozens of women with young children for my new book who have told me that they\u2019re cutting back on weekend activities, dinners out, holidays, after-school clubs and new clothing for their families. <\/p>\n One woman, who lives in Manchester and works for the NHS, and currently has a four-year-old, even told me that she and her husband have realised they cannot afford to have the second child they\u2019d always dreamed of having. So, they will be joining the ranks of a growing number of \u201cone and done\u201d parents.<\/p>\n Another, a single mother of one with a decent managerial job in the East Midlands, told me that her bills are keeping her up at night because she\u2019s starting to rely on her credit card more and more.<\/p>\n Of course, their situation is not as desperate as those I met who were at the sharp end of the two-child benefit limit, but Britain is going to have huge problems in the near future if someone doesn\u2019t throw young adults whose finances are on a knife-edge a bone soon.<\/p>\n The consensus is now very much that there is a huge economic shock coming in the autumn because of what Donald Trump\u2019s war on Iran has done to fuel and energy prices. And, while higher earners can stomach the costs or go out less, some people will be tipped into the red.<\/p>\n Alex Clegg is an economist at the independent think-tank, the Resolution Foundation.<\/p>\n Speaking to me over the phone as the new tax year began, he warned that \u201cthe key issue for low and middle income people struggling at the moment is what\u2019s happening with oil prices. The real worry is what happens this winter if energy prices<\/a> spike.\u201d<\/p>\n \u201cDoing another blanket energy price guarantee would be unaffordable so the Government really needs to find a way to target support towards people who have both low incomes and high energy costs,\u201d he explained.<\/p>\n \u201cOur suggestion is developing a social tariff and setting eligibility so that people on lower household incomes or with high energy use pay less. People who do not qualify for benefits but need a lot of energy because they have several children or large draughty houses are definitely people we should be worried about and should think about supporting.\u201d<\/p>\n Just when you thought things were getting better, when wages were going up, and the economy was stabilising, it seems we are, once again, staring down a cost of living crisis.<\/p>\n Housing crisis watch<\/p>\n Just in case you missed it, last week I reported on an interview conducted by Inside Housing\u2019s deputy editor Jess McCabe. Jess had spoken with the now former Reform UK housing spokesperson, Simon Dudley, and he\u2019d said some rather inflammatory things about Grenfell.<\/p>\n Nigel Farage said that Dudley was no longer the party\u2019s housing spokesperson<\/a> less than 24 hours after we published our story on his remarks here at The i Paper. However, there is a sensible conversation to be had about the fallout of the Grenfell tower fire, so do read what I had to say here<\/a>.<\/p>\n What I\u2019ve been watching and reading<\/p>\n Last week, while fielding calls about Simon Dudley\u2019s remarks late on a Wednesday evening, I attempted to go to the cinema and see Project Hail Mary. I managed to watch most of the film in the end, and I found it incredibly moving. As we face yet another global crisis with energy, it prompted me to think about the shared problems we have as citizens of the world and wonder why it\u2019s so hard to come up with communal solutions to them?<\/p>\n I am lucky enough to have got my hands on an early proof of the new book from the Financial Times\u2018 employment columnist, Sarah O\u2019Connor. It\u2019s called We Are Not Machines, and it covers the jobs that may be replaced by AI, from grave cleaning to care work in a thoughtful and emotionally intelligent way. In the end, O\u2019Connor asks a question I think more people ought to be asking: what do we actually need and want AI to help us with? And what, in the end, is actually much better done by a human being? Just because AI can do something doesn\u2019t mean it should. And it certainly doesn\u2019t mean it will do it well! We Are Not Machines<\/a> will be published by Penguin in June.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Want to understand what\u2019s really going on in Britain, and how we can fix it? 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